The draft budget for 2004 shows that Armenias
government expects to spend 15 per cent more than
it earns in tax revenues next year.
The National Assembly began consideration of
the budget proposals this week, which Vardan Khachatryan,
Minister of Finances and Economy, said would place
less reliance on external financing than in previous
years as a result of domestic economic growth.
Khachatryan said the draft budget would not include
grants provided by the World Bank for structural
improvements, nor funding provided by American-Armenian
philanthrophist Kirk Kerkorians Lincy Foundation
as well as donations from the Dutch government.
Compared to 2003, external transfers will
reduce by 53 billion drams (about $94 million).
But economic growth compared with last year is
bigger by 13 per cent, the minister said.
He added that tax collection had improved greatly.
State income next year is forecast to be 269.1
billion drams (about $476 million) with expenditure
estimated at 311.5 billion drams (about $551 million).
The deficit of 42 billion drams is expected to
be covered by special purpose external grants.
In particular a $14 million loan will be given
to Armenia by International Monetary Fund. It
has been confirmed this week by the executive
council of the fund.
This is the fifth allotment of the $100 million
loan for Poverty Reduction and Economic Growth
Assistance (loans of the Fund are given for 10
years and five years after receiving it the loan
has to be paid off at 0.5 percent rate).
Armenia has already been given a credit of $58
million through this project during the past three
years. With its help currency reserves of the
country have been completed and the stability
of Armenian dram has been provided.
More than 95 per cent of income is achieved through
taxes and the budget plans include an expectation
that an extra 8 billion drams (about $14 million)
will be collected from the shadow economy next
year. Failure to achieve this target will add
to the deficit.
Khachatryan outlined wide-ranging plans to increase
spending on public services, saying there would
be progress in all fields. Salaries
for teachers will double from 15,000 drams (about
$26) to 30,500 drams (about $53). The education
sphere is expected to be allotted 39,282,000 drams
(about $69,525,000), which is 23 percent more
than in 2003.
Medical workers will get a pay raise of 3,500
drams (about $6) making the average about 33,000
drams. The legal minimum wage will increase by
160 per cent from 5,000 to 13,000 drams (about
$23). Family allowances for socially vulnerable
will rise by 2,000 drams, while pensioners can
expect another 700 drams (about $1.20) on the
average payment of 7,800 drams (about $13.80).
Quizzed by deputies whether the extra payments
would be sufficient to compensate for rises in
the price of bread, heating and transport as well
as likely increases next year in bills for water,
gas and other goods and services, Khachatryan
assured that the Government would act to protect
If something increases by 100 drams or
200 drams then we will increase these monthly
sums by 2000 drams, he said. Our policy
will be directed at the poor layers of society
and other layers must be patient for a while.
Standing commissions examined the budget provisions
for the Ministry of Defense, Police, National
Security Service, prisons, and the Department
for Emergency Situations during a closed session
of the Assembly on November 22.
Spending on defense is set to increase by 12
per cent to 49.5 billion drams ($84 million),
with 6 billion drams ($10 million) for the National
Security Service, up 9 per cent. Allocations for
the police will increase by about 600 million
Inevitably, perhaps, the heads of the power structures
were not satisfied. Defense Minister Serzh Sargsyan
said afterwards: Defense is such a field
that if for two, three, or four times more money
were miraculously planned for 2004, even then
it wouldnt be enough.
He claimed that the draft budgets allocation
to the army was only half that provided for the
military in Azerbaijan.
At the same time, however, he insisted that the
President and Prime Minister will find means
for the year 2004 to increase our armament and
Spending on areas of culture, information and
sport is planned to rise by about 9 per cent to
7.479 billion drams (about $13.2 million). There
will be 1.186 billion drams (about $2 million)
to support cultural activities including theater
and concert performances.
Some 3 billion drams (about $5.4 million) will
be allocated for production of programs through
Public TV and Radio and Shirak TV and Radio, as
well as for financing the Center of Public Opinion
polling organization. This is a 5 per cent rise
on 2003, partly to fund the broadcast of national
A programme of improvement for Armenias
libraries will see 440.9 million drams (about
$780,000) provided for reconstruction work at
16 buildings as well as funding the National Library.
Salaries for librarians and museum staff will
also increase from some 14,000 drams (about $25)
to around 16,500 (about $29).